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FAQ: Gold Standard for the Global Goals

Gold Standard for the Global Goals

Frequently Asked Questions

Gold Standard for the Global Goals allows for quantification of all project impacts toward the Sustainable Development Goals in order to provide new sources of funding for our high-impact projects.

Our goal is to build demand for Emission Reductions so that supporting climate protection projects becomes standard business practice, while also encouraging development-minded investors to fund beyond-carbon impacts. In this way, we believe Gold Standard for the Global Goals can help countries, cities, companies, and investors meet the ambition of the Paris Climate Agreement and the Global Goals for Sustainable Development.

Why the name?

Gold Standard has always stood for ensuring sustainable development impacts are delivered alongside climate mitigation. Now with an ambitious global development agenda in place, we are engineering our new standard to ensure that climate action also delivers dividends to the 17 UN Sustainable Development Goals, 169 targets and 300+ indicators in a meaningful and measurable way.

What has changed?

Gold Standard for the Global Goals offers more opportunities to differentiate projects and the development impacts that have historically been viewed -- and valued -- simply as 'co-benefits' of carbon reductions. Project developers will have the flexibility to apply new methodologies to quantify and monetise these SDG impacts.

While the base requirements of the Gold Standard for the Global Goals remain very similar, some safeguarding principles have been strengthened in order to continue living up to our commitment to represent the best that can be achieved in climate and development projects. By enhancing Gold Standard's core principles of social inclusivity, robust safeguards, sustainable development and MRV, we are working to ensure that Gold Standard projects remain best in class, continue to deliver the maximum impact on the ground, and can better market their outcomes.

What is the expected development timeline?

We intend to generate the necessary guidance and infrastructure to fully launch the new standard for use by our current project developers by mid-2017. We are no longer proposing a restricted pilot phase and instead are able to bring forward a more comprehensive launch.

What is the added value of Gold Standard for the Global Goals for project developers?

Gold Standard for the Global Goals offers the following benefits to project developers:

Further differentiateyourprojects among others in the carbon markets by strengthening safeguards, especially around water and gender, elevating 'co-benefits' to certified SDG contributions, and allowing projects targeting vulnerable communities to distinguish themselves with a 'pro-poor' flag.

Seek new sources of funding by combining methodologies and issuing products from a single project that were previously only available under distinct standards.

Ensure relevance of projectspost-2020 by enabling issuance of emission reduction statements rather than carbon credits in places where double counting may occur and enhancing the ability to demonstrate contributions to the host country's SDG priorities. Streamline the certification process in the future through a new IT infrastructure that will facilitate project design processes, shorten review periods, automate monitoring where possible, and enhance reporting capabilities.

In addition, by introducing a Gold Standard renewable energy attribute product (eg, REC) label that is now possible under the Gold Standard for Global Goals, we are working to reduce the supply of renewable energy carbon credits in the market while opening up new markets for Gold Standard renewable energy projects.

Methodologies

Are projects required to apply new methodologies, like the ADALYs methodology?

No. Quantifying and issuing ADALYs and other new products will be optional. The goal of Gold Standard for the Global Goals is to provide flexibility and options for both project developers and funders to quantify, certify the impacts they prioritize – and to allow the monetization of those impacts if they wish. These products can be certified separately and sold separately from VERs or bundled with VERs as appropriate for the project and the funder.

What approaches are used by Gold Standard to quantify contributions to SDGs?

There are two approaches under Gold Standard for the Global Goals to quantify SDG outcomes:

‘Certified SDG contributions’ arise from the SD matrix completed by project developers using self-proposed indicators coupled with clear rationale, justification and in some cases expert opinion as to how these will positively contribute to an SDG. These correspond to what are currently referred to as ‘co-benefits’ and can be used as part of the project narrative and for reporting purposes. These SDG contributions still come packaged with the VER and cannot be sold separately. Gold Standard is in the process of developing activity-specific SDG matrices to ensure consistency and comparability of SDG contributions.

Gold Standard Certified SDG ImpactsTM require a Financial Needs Assessment and are based on Gold Standard-approved methodologies. These can be monetised and will therefore be assignable to specific funders on the Gold Standard public registry. Gold Standard Certified SDG ImpactsTM currently include VERs, ADALYs and Water Benefit Certificates, as well as Gold Standard Certified Impact Statements for Black Carbon/SLCPs. Quantification methodologies vary per activity type and Certified SDG Impact.

How will Additionality be applied to these new methodologies?

‘Additionality,’ as it is known in carbon markets – or in laymen’s terms, the need for additional finance in order for a project to be implemented – must be demonstrated for each and every Gold Standard Certified SDG Impact that can be monetised. SDG contributions arising from the SD matrix and included in the project narrative do not need to demonstrate this financial need or ‘additionality’ as they are not monetised individually.

How will you ensure that requirements and methodologies are simple and practical to use?

Our objective is to create the simplest tools that provide credible quantification of development outcomes of climate action in order to attract additional funding to projects. As a holistic standard used in a broad range of climate and development activities, Gold Standard for the Global Goals features more requirements than previous versions. However, only those safeguarding principles relevant to your activity will be required. As an example, wind farm or cookstove projects will not need to apply safeguards for water abstraction/scarcity, use of pesticides, or animal welfare. Our future online platform will pre-filter safeguards by activity to make this more automated for developers. We are also seeking funding to create and integrate streamlined methodologies and user-friendly intuitive monitoring tools to reduce resources needed to credibly quantify SDG impacts.

In regards to requiring demonstration of multiple SDG impacts, it is important to note that requiring a contribution to three impacts (required contribution to SDG 13 Climate Action, plus two additional) is consistent with our existing standards. For example, version 2.2 of our Energy standard requires emissions reductions plus 2 other positive contributions and one minimum neutral to the Millennium Development Goals -- the Water Benefit Standard even more.

We are also reviewing issues like project cycle and renewals in order to enhance integrity while providing greater clarity and flexibility for the user.

Certification and claims

Can a project still claim co-benefits?

We are repositioning ‘co-benefits’ to ‘SDG contributions’ in an effort to elevate these important impacts to an appropriate level rather than describing development benefits like jobs created, gender empowerment and reduced deforestation as side effects of carbon reductions. SDG contributions will function as ‘co-benefits’ do today. Project developers who wish to monetise additional impacts would have the option of demonstrating Financial Need and applying a Gold Standard-approved methodology to issue Gold Standard Certified SDG Impacts like ADALYs.

What will change with regards to the issuance of products and claims related to the SDGs?

Under Gold Standard for the Global Goals, projects will be able to claim two types of outcomes:

‘Certified SDG contributions’ arise from the sustainable development matrix completed by project developers using self-proposed indicators coupled with clear rationale, justification and in some cases expert opinion as to how these will positively contribute to an SDG. These correspond to what are currently referred to as ‘co-benefits’ and can be used as part of the project narrative and for reporting purposes. Gold Standard is in the process of developing activity-specific SDG matrices to ensure consistency and comparability of SDG contributions. SDG contributions will still be associated with the project and cannot be sold separately.

Gold Standard Certified SDG ImpactsTM require a Financial Needs Assessment and are based on Gold Standard-approved methodologies. These can be monetised and will therefore be assignable to specific funders on the Gold Standard public registry. Gold Standard Certified SDG ImpactsTM currently include VERs, ADALYs and Water Benefit Certificates, as well as Gold Standard Certified Impact Statements for Black Carbon/short-lived climate pollutants (SLCPs). Quantification methodologies vary per activity type and Certified SDG Impact. Buyers of VERs will able to claim that they have funded climate mitigation action from a project that has also made other SDG contributions.

Climate impacts will remain central to all Gold Standard projects. VERs will remain a key project outcome and can either be sold separately (with associated SDG contributions as part of the project narrative) or bundled and monetised together with additional Gold Standard Certified SDG ImpactsTM.

Additionally, projects can apply a Gold Standard approved quantification methodology to issue Gold Standard Certified SDG ImpactsTM, which can either be sold separately from Gold Standard VERs or bundled with the VER. The term ‘credit’ will not be used to describe these Certified SDG ImpactsTM. Whenever possible, we will seek to use existing accepted metrics, such as ADALYs, and ensure that these meet the needs and expectations of funders. In the case of SDG 5 – Gender – for example, it is not yet decided whether we will be using a single unit/metric or whether we will issue ‘Gold Standard Certified SDG 5 Impact Statements’.

Existing Gold Standard Certified SDG projects will continue to be featured in Gold Standard for the Global Goals, including Emissions Reductions (VERs and CERs) and Water Benefit Certificates, as well as Certified SDG Impact Statements that capture the climate impact of reductions in black carbon/Short Lived Climate Pollutants (SLCPs).

Will a single activity be able to issue multiple products (like VERs) or statements (like black carbon or ADALYs)? Can these be bought or funded by different buyers and sponsors?

Yes - activities will be able to issue multiple products and statements of outcome in order to seek funding from multiple (and new) sources. Rules on additionality, claims management, co-issuance, causal linkages, and registry function are clarified in the full requirements.

Can multiple donors support a single project? If so, how do donors claim their SDG certified impact if they are co-financing (with different portions) a specific impact?

Yes there can be multiple donors or funders to one project. The approach taken here is similar to what already happens with development programs which are co-funded by various donor agencies. Funders or sponsors must disclose the exact impacts funded or sponsored in their communications. These will also be disclosed in Gold Standard’s public registry. Claims will have to follow the requirements listed for Gold Standard Certified Projects and the claims guidelines of the relevant Gold Standard Certified SDG Impact (eg VER). A sponsor or funder of Certified SDG Impacts must not make claims for other Certified SDG Impacts that they have not directly funded. They can, however, include a description of all SDG contributions as part of a project narrative, but must indicate clearly and precisely what their funds supported.

How will Gold Standard monitor and manage claims, particularly if there are multiple funders?

Claims will be transparently recorded and assigned to funders or sponsors within a public registry. ‘Policing’ of claims as a technical development will be further defined during piloting and in discussions with stakeholders to ensure that we play the role that the market(s) require of us and in line with transparent, best practice. In addition, Gold Standard is currently pursuing ISEAL membership and accordingly will create the necessary protocols to comply with its various codes and guidelines, including for claims best practice.

Transitioning existing projects to Gold Standard for the Global Goals

How will Gold Standard for the Global Goals affect my current project?

The goal is for transition to the new standard to be straightforward, inexpensive and pragmatic for projects. The detailed Transition Guidelines will be available in late April 2017. All projects currently undergoing certification under the existing Gold Standard scopes will be eligible to transition to Gold Standard for the Global Goals. A 'coming into force' and 'grace period' will be established to ensure fairness for those already undergoing certification. It is also our intention to support the transition of existing projects to Gold Standard for the Global Goals and we will release further details later in the development. In the meantime, existing projects will be unaffected and we will continue to provide all services as normal.

Can Gold Standard for the Global Goals methodologies be applied to Gold Standard projects retrospectively?

The vision of Gold Standard for the Global Goals is that all projects can migrate from a previous version to the new standard. However, this may not be logical for some projects because of where they are in the certification/issuance cycle. We will therefore take a pragmatic approach in determining if or when projects migrate.

Will it be possible for operational projects from other standards to be retro-actively validated under Gold Standard for the Global Goals?

The vision of Gold Standard for the Global Goals is that all projects can migrate from a previous version to the new standard. However, this may not be logical for some projects because of where they are in the certification/issuance cycle and we will therefore take a pragmatic approach in determining if or when projects migrate.

Projects from other standards may be eligible provided they meet stringent Gold Standard requirements including stakeholder inclusivity at the design stage, safeguarding principles, holistic contributions to sustainable development, and a robust monitoring plan. There will also be additional criteria that will be specific per project type and methodology.

How will GS deal with impact claims beyond carbon of projects that are not transitioning to Gold Standard for the Global Goals?

Only projects that transition to Gold Standard for the Global Goals will be able to issue Gold Standard Certified SDG ImpactsTM. Transition guidelines will be issued to assist and encourage projects from previous versions to transition to Gold Standard for the Global Goals.

For projects which do not transition to Gold Standard for the Global Goals, the Emission Reduction (VER or CER) buyer will be able to communicate SDG Contributions (formerly known as ‘co-benefits’) as part of their claim narrative as well as the key principles of inclusivity, strong safeguards and robust monitoring.

Under the new standard, the registration renewal period will be reduced to 5 years, how will this impact small projects? Which projects will be automatically renewed and which projects will be exempted from some of the renewal requirements?

The Gold Standard Technical Governance Committee discussed this issue at length and came to the decision to shift to a 5 year renewal period based on the 5 year review period adopted for nationally determined contributions (NDCs) under the Paris Agreement. This does not mean that our projects will have to overlap their crediting period with NDC cycles. It does means that our projects will have to renew baseline more frequently to take into account any baseline updates that may happen due to updates in NDCs. We are currently working on various activity guidelines like those for renewable energy projects and community focused projects. These activity guidelines will specify which activities will be renewed automatically for, e.g., improved cookstoves projects could be allowed to renew automatically for second crediting period. These will be available with the publication of the standard in June 2017.

Will the micro scale scheme be available under Gold Standard for the Global Goals?

Yes, but we will revamp it to address any shortcomings in the current scheme.

If a project is about to do its stakeholder consultation should it wait for GS4GG?

No. Changes to the stakeholder consultation process are relatively minor from previous versions and project will not be expected to do another consultation in order to transition. The transition guidelines will make provisions for grace periods in some instances. These transition guidelines will be published at the end of April 2017.

Does a project have to do all the SDG Impacts from the start or can it add some later?

New SDG impacts can be added during a project's life cycle but would of course require all monitoring information including baseline data per the methodology. A key principle of claims management is clear attribution and disclosure of funding sources. Therefore, projects will not be able to issue impacts retroactively if other assets (eg, carbon credits) were sold during that period, as this would not have been clear to those funders from the earlier years.

Fee structure

What will be the fee structure for Gold Standard for the Global Goals?

We are currently considering the implications of the new standard on our fee structure, as the model introduces new dimensions of certification, such as certification of a project or activity without issuance of any product (e.g. VER or CER).

Our objective is to reduce burden and increase efficiency wherever possible within the bounds of maintaining the high quality and rigour associated with Gold Standard. The development of an online platform and an Assurance Framework, which are not yet developed but will be released in due course, are expected to reduce time and costs of certification at that time.

Project funders and demand

Where does the potential demand for certified SDG impacts comes from? Are those buyers the same as VER buyers or other types of buyers? Do they come from the public sector or the private sector?

Our market research, currently in process and due to report at the end of June 2017, is investigating these sources of demand specifically to those relevant to clean cooking and heating technologies -- black carbon and SLCP reductions, health, poverty alleviation, gender equality and renewable energy access. It is evaluating the merits/efficacy of valuation approaches for funding these impacts and the level of rigour or assurance required to verify impacts.

Preliminary observations suggest that the sources of funding vary quite widely. Private sector funding among corporates shows the preference for impacts that have close relevance to core business operations and supply chain activities, which broadens the potential scope far beyond today's VER buyers. This audience is showing signs of interest in the quantification and certification of SDG impacts of their sustainability initiatives – sometimes but not always through results based payment mechanisms.

Impacts that not only deliver social benefits but also demonstrate reduced costs of government spending – including ADALYs, which clearly lower the burden of disease -- so far seem to resonate with public funders.

What are the main incentives for potential purchasers of Gold Standard Certified ImpactsTM?

Gold Standard for the Global Goals will provide the platform to blend different types of financing and may therefore be attractive to a broad range of investors.

Compliance buyers may be interested to report on the SDG contributions of their climate investments; or they may be interested to know that their investment was matched by public finance targeting non-carbon impacts such as health or women’s empowerment, for example.

Private investors may opt for the ‘activity only’ certification pathway. This will serve as a tool to de-risk their investment as well as a tool to assess ex-ante and ex-post impacts of the investment.

Public funders have an interest in financing specific Gold Standard Certified SDG Impacts in line with their priorities, especially in cases where there is a clear financial incentive, that is, when their investment yields significant economic and social benefits that can be quantified.

Corporates will find that Gold Standard for the Global Goals provides a flexible platform to quantify multiple impacts across climate and sustainable development. Gold Standard for the Global Goals will enable corporates to report on the actual SDG impacts of their strategies and their contributions to local development priorities, therefore unlocking civil society recognition (from, e.g., WWF, CDP, local authorities, etc.), which will create the incentive for corporates to raise their ambition over time.

Does the concept of 'retirement' apply to Gold Standard Certified SDG ImpactsTM?

The concept of ‘retirement’ is usually associated with ‘carbon neutrality’ which is not a relevant concept for Gold Standard Certified SDG ImpactsTM. However, we must ensure that each Certified SDG Impact is only monetised only once; therefore, all Gold Standard Certified SDG ImpactsTM will be tracked in a public registry where they can be assigned to specific funders.

If SDG ImpactsTM can be sold separately to Emissions Reductions, how will the prices for these individual impacts be set?

Gold Standard is currently conducting a market assessment to seek input and opinions on valuation techniques for additional Certified SDG ImpactsTM, but it is not clear that Gold Standard will take a position on the pricing of these impacts, beyond advocating for transparency.

What SDG ImpactsTM will be tradeable financial assets?

As we develop new mechanisms, we will continue to be open minded about which are tradeable and market-based, like carbon credits and renewable energy certificates (RECs) function today, and which will be funded using more non-market approaches to results-based finance. It is important to note that there remains a critical role for consultants and retailers in matching investors with projects and being compensated for this important service.

Is it possible that the new ADALYs methodology may depress current VER prices for improvedcookstoves, as projects that do not apply the ADALYs methodologywill no longer be able to claim health impacts?

Cookstove projects can still make health-related claims if they provide expert stakeholder input and clear academic justification for health impacts. In addition, any cookstove project may still claim that 'Many improved cookstoves are associated with reduced smoke, which can lessen exposure to dangerous indoor air pollution.' This proposed specification is designed to protect projects and funders against accusations of overclaiming or 'SDG washing' and to work toward compliance with ISEAL requirements.

Regarding VER prices, we are acutely aware that prices for carbon credits are depressed and do not reflect the value of carbon reductions, even less the real value of the additional project benefits. Market information indicates that while health related claims are important for buyers, the main motivation to buy a VER from a cookstove project remains for offsetting purposes. And while cookstove projects remain attractive to buyers, prices have significantly decreased as supply of credits from cookstove projects has steadily increased over the years. It is reasonable to conclude that the key driver of prices remains supply and demand dynamics. Further, as the research around cookstoves and their impacts matures, the exposure of a project or funder to overclaiming could be a greater downside risk than an upside opportunity to overcome the pricing trends driven by the supply/demand dynamic. Clarity on the future of carbon markets and progress on the demand side are therefore of utmost importance.

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